PETROL, DIESEL AND COOKING GAS: HOT COMMODITIES IN

C O N F I D E N T I A L ASMARA 000804 SIPDIS SIPDIS LONDON, PARIS FOR AFRICA WATCHERS E.O. 12958: DECL: 10/06/2016 TAGS: PGOV ECON EPET ER SUBJECT: PETROL, DIESEL AND COOKING GAS: HOT COMMODITIES IN ERITREA THESE DAYS Classified By: AMB Scott H. DeLisi, for reasons 1.4 (b) and (d) ¶1. (U) Summary: Lines snaked through petrol stations over the weekend of September 30, as word of gasoline shortages spread. The mothers of Asmara, who have been increasingly reliant on kerosene for cooking, feared it might be the next fuel to disappear and rushed to stock up, adding to the fuel "panic." Fuels - gasoline, diesel and kerosene - all require the expenditure of Eritrea's scarce foreign currency. We anticipate that the GSE, which continues to exercise strict control over the economy, will shift resources to ensure a steady trickle of these fuels, although perhaps not all at the same time. Recent changes to diesel distribution and the choice by the GSE to temporarily stop the transport of gasoline from Sudan to Eritrea all add to the on-going fuel problems in Eritrea. Furthermore, with no private sector supply alternatives to the GSE's fuel distribution, fuel problems for the population are likely to continue. End Summary. ¶2. (U) For the past few months the propane supply, the primary gas used for cooking in the urban areas, has been nearly non-existent. As a result, Asmarinos have resorted to using kerosene for cooking. Recent shortages in gasoline fueled a panic that kerosene will be the next to drop off the list of available fuel and thus created a run on the limited market. Gasoline reportedly will become available again between October 6 and 8. ¶3. (U) The shortage of propane began several months ago forcing many restaurants to close for several days at a time. Until recently, diplomats had been able to get propane, although only by formal request to the Ministry of Foreign Affairs. (In one instance, the Embassy had to provide a restaurant owner with a letter that enabled him to procure cooking gas to cater a representational event.) On October 3, a staff member of the European Commission (EC) told Poloff the GSE had informed them that the EC would no longer receive their supply either. ¶4. (C) On the diesel front, the GSE transferred the control of diesel fuel from the Petroleum Corporation of Eritrea to the Ministry of Defense in late August but offered no public comment on the reasons for the transfer. Following this development, Embassy Asmara, the UN, and various other foreign missions received letters indicating that their diesel allotment would be restricted. For some, such as the European Commission, the new allotment represented nearly a 50 percent cut from their previous one. The United Nations Mission in Ethiopia and Eritrea (UNMEE) ration was also cut, by almost 40 percent. The SRSG told Ambassador that he was concerned that the cuts would severly constrain UNMEE operations though others in UNMEE were not as concerned. (Comment: While the Embassy also received a reduced allotment, the amount is sufficient for business needs under current power availability, described septel. End Comment.) ¶5. (U) For locals, diesel is now available for purchase only with ration coupons. Residents must justify the need for diesel when applying for these coupons, for example by proving a business need or a special event like a wedding, which are then issued through the local municipality. In practice, the reduced diesel supply has only minimally affected the small percentage of individuals driving privately owned vehicles. Of much greater impact to local residents has been adjustments in public transportation. This weekend, the two public bus systems (and only bus lines) suddenly saw a 40% reduction in service in the greater Asmara area. In typical Eritrean fashion, the GSE-controlled media reported on the cuts only after people waited during the weekend for busses that never arrived. The media reassured the public that this reduction in services would allow the bus companies to "implement major development programs" and to "help achieve goals". ¶6. (C) In a meeting on September 29 with Emboffs, Ahferom Tesfagabir, the General Manager of Total Oil(formerly Mobil),confessed to the complete absence of petrol in Eritrea. He said that Total Oil had provided diesel fuel to the GSE for a tanker to travel from Massawa to Port Sudan to receive a supply of gasoline. For some reason unknown to him, the tanker had not yet departed Massawa. He speculated that the reason might be political, given the exchange of harsh words during the week between Sudanese President Bashir and the GSE about Darfur and Sudan's internal stability. According to Ahferom, upon transferring control of diesel to the Ministry of Defense the GSE immediately charged it with the task of significantly reducing diesel consumption. He further noted that the on-going issues with the fuel supply are all related to the Eritrea's continuing trouble in obtaining hard currency. ¶7. (SBU) Comment: The lack of gasoline for the past few days has not had major impact - so far. However, should the problem continue and should kerosene stockpiling by individuals lead to GSE restrictions, the rural communities would most likely feel the pressure first. They are heavily dependent on kerosene for cooking, since harvesting wood (unless it is already on the ground) is strictly prohibited and charcoal is expensive. With severe penalties for black market activities and, as such, nearly no black market, no other options exist for Eritreans seeking fuel. We expect that the GSE's limited supply of hard currency will continue to result in its inability to procure enough fuel to meet demand, and shortages like those seen in the past weekend will continue. End Comment. DELISI